What is PAN (Permanent Account Number) ?
The provisions of Section 139A of the Income Tax Act, to be read with Rule 114 of the Income Tax Rules deal with the requirement of application and obtaining of Permanent Account Number.
PAN is a 10 digit code allotted to each essessee by Income Tax Department. Quoting of the Permanent Account Number (PAN) has been made mandatory by the I.T. Department in many instances. An assessee needs to mention his PAN in his return.
A person has to apply in Form 49A to the Assessing Office having jurisdiction to assess the applicant. In order to improve PAN related services, the Dept. has authorized UTI Investor Services Ltd.( UTISIL) to manage IT PAN Services Centers in all cities or towns where there is an Income Tax Office, and National Securities Depository Limited (NSDL) to dispense PAN services.
The main advantages of having a PAN include, convenience to locate the Assessing Officer, Faster Assessment , Processing of Refunds, ensuring Tax Compliance, Credit for Payment of Taxes, and Control over unregulated and Undisclosed Transactions.
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The application form should be filled in carefully and completely giving specified information, including name of the assessee, father’s name , address, date of birth, sources of income, etc.
Persons required to apply for Permanent Account Number (PAN)
Following persons, who have not been allotted a PAN, to apply to the AO for the allotment of a PAN within following time limit
Persons required to apply for Permanent Account Number | Time limit for making such Application |
Every person, if his total income or the total income of any other person in respect of which he is assessable under the Act during any Previous year exceeds the Basic exemption. | on or before 31st May of the assessment year |
Every person carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed 5 lakhs in any Previous year | before the end of that previous year |
Trust required u/s 139 (4A) | before the end of that previous year |
Every person being a resident, other than an individual, which enters into a financial transaction of an amount aggregating to 2,50,000 or more in a financial year | on or before 31st May of the immediately following financial year |
Every person who is a MD, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of any person referred in (4) above or any person competent to act on behalf of such person referred in (4) above. | on or before 31st May of the immediately following FY in which the person referred in (4) enters into financial transaction specified therein. |
a.Cash deposits aggregating 20 lakhs or more in a financial year, in one or more a/c with a Bank or a co-op, bank
| At least seven days before the date on which he intends to enter into the said transaction. |
Cases where PAN to be quoted in Transactions
Nature of transaction | Value of transaction |
Sale or purchase of a motor vehicle, other than two- wheeler | All such transactions. |
Opening an account [other than a time-deposit referred to at Serial No.12 and a Basic Savings Bank Deposit Account] with a banking company or a co operative bank. | All such transactions. |
Making an application to any banking company or a co- operative bank or to any other company or institution, for issue of a credit or debit card. | All such transactions. |
Opening of a D-Mat account. | All such transactions. |
Payment to a hotel or restaurant against a bill or bills at any one time. | Payment in cash of >50,000. |
Payment in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time. | Payment in cash of >50,000. |
Payment to a Mutual Fund for purchase of its units. | Amount > 50,000. |
Payment to a company or an institution for acquiring debentures or bonds issued by it. | Amount > 50,000. |
Payment to the RBI, for acquiring bonds issued by it. | Amount > 50,000. |
Deposit with a banking company or a Co-operative bank or post office. | Deposite in cash > 50,000 during any one day |
Purchase of bank drafts or pay orders or banker's cheques from a banking company or a Co-operative bank. | Payment in cash > 50,000 during any one day. |
A time deposit with,- (1) a banking company or a co-operative bank (ii) a Post Office: (iii) a Nidhi (iv) a NBFC. | Amount > Rs 50,000 or aggregating to more than 5,00,000 during a financial year. |
Payment for one or more pre-paid payment instruments, as defined in the policy guidelines for issuance and operation of pre-paid payment instruments issued by RBI or a banking company or a Co-operative bank or to any other company or institution. | Payment in cash or by way of a bank draft or pay order or banker's cheque of a amount aggregating to > 50,000 in a FY. |
Payment as life insurance premium to an insurer | Amount aggregating to >50,000 in a financial year. |
A contract for sale or purchase of securities (other than shares). | Amount > 1,00,000 per transaction |
Sale or purchase, by any person, of shares of a company not listed in a recognised stock transaction exchange. | Amount > 1,00,000 per transaction |
Sale or purchase of any immovable property. | Amount > Rs: 10,00,000 or SDV > Rs:10,00,000 |
Sale or purchase, by any person, of goods or services of any nature other than those specified at S. No. 1 to 17 of this Table, if any. | Amount > 2,00,000 per transaction |
Section-140 : Income Tax Return by Whom to be Signed / Verified
Following person not required to obtain PAN:
Minor not having any income taxable in his own hands, can enter into the above transactions by quoting the PAN of his parents or guardian.
In case of NR, earn only income from investment in specified fund (Category I or II of AIF located in IFSC) in PY & specified fund deducted TDS u/s 194LBB.
In case of NR eligible foreign investor, earn only income from transaction made in capital assets referred u / s 47(viiab), which were listed on a recognized stock exchange in IFSC & consideration on transfer shall be paid or payable in foreign currency.
